PREPARE FOR THE COMING "EARNINGS RECESSION" SCARE
- Start bracing yourself for an earnings recession, with first-quarter numbers for the S&P 500 expected to suffer the first decline in nearly three years (begins today with JPM & WFC - but the busiest period will start the week of April 22 and run through May 3, when “an avalanche of results from various sectors” are released ),
- This earnings season is make or break for this market, because we need earnings growth to resume if the S&P 500 is going to continue to grind higher and test the former all-time highs, and 3,000 in the S&P 500.
- The outlook for the first-quarter continues to get more negative, and the second-quarter outlook turned slightly negative for the first time on 04-10-19,
- With 25 of 505 S&P 500 companies having reported results, the blended growth estimate is a negative 4.6%, with 8 of 11 sectors expected to show a year-over-year EPS decline.
- That’s a big swing lower from expectations for growth of 3.0% estimated as of Dec. 31.
- That puts earnings on track to suffer the first decline since the second quarter of 2016, when they fell 2.6%, and the biggest decline since the first quarter of 2016’s 6.6% drop, according to FactSet data.
FACTSET TRACKING:
- As of April 5 more companies are cutting earnings guidance than usual, leading analysts to make bigger cuts to their forecasts.
- 74% of the S&P 500 companies that have issued earnings guidance have lowered expectations, above the five-year average of 70%.
- The average analyst EPS estimate has been lowered by 7.3% during the first quarter, compared with the five-year average decline of 3.2%.
- The sectors currently expected to see the biggest EPS declines are energy at 23.6%, materials at 12.6% and information technology at 10.6%,
- The three sectors expected to show EPS growth are health care at 3.8%, utilities at 3.6% and real estate at 2.0%.
- perhaps more important for the outlook for the stock market is that the blended EPS growth estimate for the second quarter slipped into negative territory on 04-10-19 to -0.3% from a rise of 3.4% as of Dec. 31.
[SITE INDEX -- MATA - FUNDAMENTALS - EARNINGS]
READERS REFERENCE (SUBSCRIBERS-RESEARCH & PUBLIC ACCESS )
MATA: FUNDAMENTALS - Q1 EARNINGS
MATASII RESEARCH ANALYSIS & SYNTHESIS WAS SOURCED FROM:
SOURCE: 04-11-19 - - "Risk of earnings recession rises, as S&P 500 profits to fall for first time in 3 years"
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